Neoliberalism in Brazil began with the government of Fernando Collor de Mello and was consolidated with the arrival of Fernando Henrique Cardoso as president.
There was a reduction in public investment and privatization of state-owned companies.
Summary
With the end of the military dictatorship, Brazil needed to put an end to its main economic problem: inflation. Brazilian industry was also lagging behind the technological advances of other Western countries.
To this end, Collor de Mello proposed the creation of a new currency, changes to labor laws, the opening of the national market and the privatization of state-owned companies. These measures became known as the Collor Plan.
In order to open Brazil to international markets, the country participated in the founding of some regional economic blocs such as Mercosur.
However, due to accusations of corruption and the impeachment he suffered in 1991, President Collor was unable to put his ideas into practice.
In this way, Vice President Itamar Franco assumed the presidency and called Senator Fernando Henrique Cardoso to be Minister of Finance. In this position, Cardoso would outline the Plano Real that ended inflation in Brazil and stabilized the economy.
FHC Government
With the success of the Real Plan, Fernando Henrique Cardoso won the presidential elections in 1994, defeating Luís Inácio da Silva, known as Lula.
With FHC’s rise to power, the State began to have another function. From being a developmentalist and large-investing State, as was the case under Getúlio Vargas, JK and the military dictatorship, the State would become a regulator.
Therefore, several regulatory agencies were created to dictate the rules for new companies that began operating in the country. For example: since state telephone companies were abolished, private companies have to submit to Anatel in order to operate in Brazil.
Thus, FHC was able to implement neoliberal ideas in Brazil, which included:
- Privatization of state-owned telephone companies such as Telebras, Telerj, Telesp, Telemig, etc. and the national company Embratel;
- Sale of state banks such as Banerj, Banestado, Banespa, etc.
- Privatization of companies such as Embraer, Vale do Rio Doce and Companhia Siderúrgica Nacional, among others;
- 20% reduction in public employees at federal and state levels through early retirement or dismissal;
- Outsourcing of workers and various state services;
- Opening of the national market to foreign companies.
Consequences
The consequences of neoliberal policy in Brazil can still be felt today.
Although the Lula government has restored the State’s leading role as an investor, sectors that were protected by public authorities, such as education, have seen investments decrease and private capital participation increase.
Likewise, the increase in concessions for foreign companies to operate in Brazil. Concession is not privatization. It is simply granting the investor the right to operate a service under certain conditions. Currently, several Brazilian highways operate in this way.